Credit-card operator Visa Canada has upped the ante in its unusual public spat with one of its top clients – retail giant Wal-Mart Canada Corp.

In an open letter to be published on Thursday in some daily newspapers, including The Globe and Mail, Visa Canada lashes out at Wal-Mart for seeking an "unfair advantage" over other merchants in negotiating transaction fees and "unfairly dragging millions of Canadian consumers into the middle of a business disagreement."

On the weekend, Wal-Mart said it will stop accepting Visa at its 400-plus stores, starting in Thunder Bay on July 18, because the card's transaction fees "remain unacceptably high."

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The dispute between Visa and Wal-Mart has become a flashpoint for retailers amid complaints about excessively high credit-card fees at a time of rising costs, putting pressure on merchants' operations. Retailers are watching Wal-Mart's latest moves in its fight with Visa as many in the industry also are looking for breaks in their credit-card fees to help lower expenses, said Diane Brisebois, president of the Retail Council of Canada.

"This issue is not going to go away," Ms. Brisebois said in an interview this week. "Many retailers are very frustrated. … A lot of retailers feel that the credit-card market has not been competitive in North America."

In parts of Europe, credit-card fees have been scaled back to close to 0.3 per cent of transaction charges, compared with between 1.5 per cent and 2.5 per cent previously, she said.

In Canada, credit-card fees are on average about 1.5 per cent, said Karl Littler, vice-president at retail council.

In parts of Europe and in Australia, local competition agencies have ruled that credit-card fees charged to retailers were excessive, prompting them to regulate a cap which, in some cases, is less than one-fifth the rate charged in Canada, he said.

Rob Livingston, country manager of Visa Canada, declined to comment on Wednesday.

But in Visa's open letter to cardholders and retailers, it said it recently offered Wal-Mart one of the lowest rates of any merchant in the country but the discount chain is demanding more. "They are using their size and scale to give themselves an unfair advantage," it says.

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"They believe that their cost to accept Visa cards should be much lower than all other merchants – lower than local grocery stores, pharmacies, convenience stores – and yes, charities and schools too," it says.

It criticizes Wal-Mart for initiating a public fight – "something we never wanted – and they are using their own customers as negotiating leverage by stating that they will no longer accept Visa cards at Wal-Mart stores.

"Wal-Mart is unfairly dragging millions of Canadian consumers into the middle of a business disagreement that can and should be resolved between our companies."

The letter refers to an agreement the federal government came to with Visa and MasterCard in 2014 in which they said they would lower the cost of electronic payments "to a reasonable and fair level." The move helped all businesses but "significantly" benefited small ones and charities, the letter says.

Mr. Littler said Visa and MasterCard lowered their rates to an average of 1.5 per cent from more than 1.6 per cent and 1.7 per cent, respectively, effective last year. Neither Visa nor Wal-Mart would disclose that retailer's fees.

Wal-Mart said in a statement on Saturday that to keep prices low it constantly looks for ways to reduce its operating costs. It said it pays more than $100-million in annual fees to accept credit cards. "Lowering costs such as these is necessary for us to be able to keep our prices low."

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The retailer will continue to accept MasterCard, Discover and American Express, as well as Interac debit cards and cash, it said.

Still, the battle isn't necessarily over. Wal-Mart spokesman Alex Roberton said on Wednesday the company remains "optimistic that we will reach an agreement with Visa." He said "we sincerely regret any impact this will have on our customers who use Visa."

In Ottawa, Linda Lapointe, Liberal MP for Rivière-des-Milles-Îles, has introduced a private member's bill to cap credit-card fees for merchants. The matter is expected to be dealt with in the fall.

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